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There are Clouds in your company’s horizon

‘Cloud’ is a service, usually a platform or software, delivered to you from somewhere else over the Internet. Also known as ‘cloud computing,’ corporate clouds aren’t totally new — many companies have been using services (Fidelity, Siebel, Hewitt…) for years.

So why is ‘cloud’ suddenly on the opportunity list of corporations everywhere?

Cloud has become quite good and it is proven to be highly reliable to manage the software they built themselves. Companies like Amazon and Rackspace provide platform-as-a-service (PaaS) with near-instant scalability and 99.9 % availability. Businesses can host their software there and not fret over capital costs, performance or up-time. Just buy what you require and release what you don’t need. Companies become renters. At the same time, the platform providers offer better cost for higher performance and reliability. Smart enterprises know Amazon is never down.

Software-as-a-service (SaaS) like Google’s Docs has also proven itself. Consumers needn’t download new software to use the latest functionality; it’s just ‘there.’ For enterprises, SaaS lowers the cost of software delivery, training and development. Because it is often Web-based, a cloud application performs nicely on most computers with an up-to-date browser.

Speed is king for agile companies. Why write software when you can buy it, especially when it comes as a service? Frugal companies can shift IT budget to new priorities like bolstering internal network capacity and building a robust mobile architecture.

‘On-premise’ is the opposite of cloud. It’s the traditional data center service that companies managed for decades. Company computers encircled in a firewall deliver customized applications direct to employees. There are many advantages with ‘on-premise:’ security, direct access to data, flexible development and a strategic, customized application architecture. Such a diverse architecture reflects the evolution of the company and is a best-fit for optimized business process. The downside? ‘On-premise’ is expensive to maintain.

It’s doubtful a company can migrate all its software and data to the cloud. Scientific and manufacturing information streams from special non-cloud devices. Agile companies that use strategic information will never surrender the right to ad hoc business analytics from Big Data hiding on both sides of the firewall. Legally, there is some highly secure information that cannot exist off-premise, at least for now.

It might be better to imagine smaller enterprise clouds instead of a single, large cloud. Employee productivity software (documents, spreadsheets, files…) could be a little cloud. Email could be a cloud. Non-integrated, workflow-free applications could be another little cloud. Big, interconnected systems probably won’t make it to the cloud.

Andrew McAfee, author of Enterprise 2.0, recently wrote a though-provoking blog post about clouds and the enterprise. He compared today’s cloud opportunity with last century’s steam-versus-electricity choice. U.S. manufacturing was driven by steam power in 1910. Companies heavily invested in it were reluctant to change to electric power. Two decades later, those who disdained conversion were the minority. Newer manufacturers either chose electricity from the get-go or they switched. McAfee won’t make a prediction, but his intuition says cloud is going to grow in the enterprise.

I agree. Companies already have a few clouds; there will certainly be several more.